Mortgage Notes Payable

The Company’s mortgage notes payable consist of the following as of June 30, 2014 and December 31, 2013 (dollar amounts in thousands):



	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate ⁽¹⁾		Weighted Average Maturity ⁽²⁾
June 30, 2014	757	$	4,125,621	4.90	%	6.00
December 31, 2013	177	$	1,258,661	3.42	%	3.41

____________________________________


(1)	Mortgage notes payable primarily have fixed rates or are fixed by way of interest rate swap arrangements. Effective interest rates range from 2.40% to 7.20% at June 30, 2014 and 1.83% to 6.28% at December 31, 2013.


(2)	Weighted average remaining years until maturity as of June 30, 2014 and December 31, 2013, respectively.

In conjunction with the various mergers and portfolio acquisitions, as described in Note 2 — Mergers and Acquisitions, aggregate net premiums totaling $137.4 million were recorded upon the assumption of the mortgages for above-market interest rates. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgages using the effective-interest method. As of June 30, 2014, there was $101.9 million in unamortized net premiums included in mortgage notes payable, net on the consolidated balance sheet.

The following table summarizes the scheduled aggregate principal repayments subsequent to June 30, 2014 (in thousands):



Year	Total
July 1, 2014 - December 31, 2014	$	104,043
2015	270,843
2016	250,881
2017	522,655
2018	252,292
Thereafter	2,724,907
Total	$	4,125,621

The Company’s mortgage loan agreements generally require restrictions on corporate guarantees and the maintenance of financial covenants including maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios). As of June 30, 2014, the Company was in compliance with the debt covenants under the mortgage loan agreements.

During the three and six months ended June 30, 2014, the Company paid off $132.8 million and $854.5 million, respectively, of mortgage notes payable, including notes that were subject to interest rate swap agreements. In connection with the debt repayments, the Company paid prepayment fees totaling $3.7 million and $33.5 million for the three and six months ended June 30, 2014, respectively. In addition, the Company paid $9.9 million during the six months ended June 30, 2014 for the settlement of interest rate swaps that were associated with certain of the mortgage notes, which approximated the fair value of the interest rate swaps. Both the prepayment fees and interest rate swap settlements are included in interest expense, net in the accompanying consolidated statements of operations. No such swap settlements were paid during the three months ended June 30, 2014. In addition, the Company wrote off the deferred financing costs and premiums and discounts associated with these mortgages, which resulted in a reduction to interest expense of $1.6 million and $23.6 million during the three and six months ended June 30, 2014, respectively. The recently paid off mortgages had a weighted average remaining interest rate of 4.86% and a weighted average remaining term of 2.5 years.